It’s never easy to talk about money with your partner. But it is usually a “must-have” conversation to have, particularly when it comes to having money available for unforeseen situations. When planning your financial future, it’s important to consider an emergency fund. Having a safety net of money that is set aside specifically for unexpected or unplanned scenarios can help you manage the impacts of difficult times. We’ll explore what’s the best way to talk to your partner about saving for emergencies.
Why Do We Need an Emergency Fund?
An emergency fund is an important part of a healthy financial plan. It can provide a cushion when unexpected expenses hit, such as emergency medical bills, car repairs, or sudden job loss. It also helps to reduce the stress associated with emergency situations by providing a source of funds that can be used in an emergency without having to rely on credit cards or loans. By saving for emergencies, you can be prepared for any crisis that may arise and have peace of mind.
An emergency fund should be tailored to your individual needs, taking into consideration your income, expenses, and lifestyle. The amount of money needed should be carefully considered and adjusted accordingly.
It’s important to remember that emergency funds should not typically be used to cover regular expenses such as rent or food costs. An emergency fund should only be used for unexpected and emergency expenses that cannot be reasonably funded from other sources.
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Starting the Conversation
Use a checklist like the one below or from a financial planner or a trusted company as many checklists are available online to start a conversation with your partner. It is typically easier to use a structured list rather than having to first start the conversation which might be hard to do, and then figure out all that you need to discuss. A checklist can give you to-do items and help you set dates as to when you plan to complete them.
Conversation Checklist
Here is a typical checklist to help you talk with your partner about saving for emergencies:
1. Find the Right Time to Talk – Having the right place and time to talk is crucial to starting the conversation. Pick somewhere that will provide a relaxed atmosphere.
2. Be Clear and Open – Most couples talk about their financial goals, but don’t always talk in detail about how they can reach those goals or what to do if things get tight. Have an open conversation with your partner about the importance of setting up an emergency fund and talk through any concerns either of you may have.
3. Share Your Ideas – It’s important that both partners are involved in making decisions together when it comes to finances. Talk through ideas on how you can save money for an emergency fund – whether it be cutting back on dining out or putting extra money into a savings account each month.
4. Make a Plan – Once you have discussed your ideas, make a realistic plan of action and set goals you can both commit to. Write down your plan and talk through it in detail with each other, so that you are both on the same page.
5. Stay Positive – Even though saving money for an emergency fund may feel daunting, try to stay positive and motivate each other to reach your common goal. Keep track of your progress and reward yourselves after reaching milestones. This will help keep your morale up as you work towards building a financial safety net.
6. Be Patient – Saving for emergencies takes time, so be patient with yourself and your partner when things don’t happen overnight. However, it is important to remain consistent – no matter how small the amount, every bit counts towards achieving your financial goals.
7. Don’t Forget Estate Planning – Emergencies often come with health issues so having a health care proxy, otherwise known as a health care power of attorney, can be a critical document as can a power of attorney for financial matters. Being able to get to the money you are saving is important and a power of attorney can help with that if you are not listed on the bank account that holds your emergency funds.
Setting Up an Emergency Fund
Once you have your emergency fund in place, discuss how you can maintain it with your partner. Talk about the strategies that will work best for both of you – from setting up automatic transfers or reminders, to making regular contributions towards saving goals. It’s helpful to review your plans regularly and make adjustments when necessary.
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Here are some tips to save for emergencies:
- Start by determining how much money should be placed in your emergency fund. Depending on your circumstances and lifestyle, this may vary. However, a good starting point is saving enough to cover three to six months’ worth of expenses.
- Put this money into an easily accessible savings account and avoid dipping into it for anything other than genuine emergencies.
- Discuss how you can maintain the emergency fund with your partner and come up with strategies that work for both of you.
- Review your plans regularly and make adjustments when necessary.
- Set up automatic transfers or reminders to contribute towards saving goals on a regular basis.
- Take advantage of online budgeting tools available to help manage saving goals better, such as saving calculators and saving trackers. Monitor your saving progress and make saving a priority.
Building a financial safety net now will give you one more layer of security to fall back on in the future. So don’t wait – start saving for emergencies, together.
Include Estate Planning in Your Financial Discussion
As mentioned above, part of your financial discussion should include estate planning – a Last Will and Testament, a Trust, Power of Attorney, and Health Care Proxy – all important parts of a comprehensive estate plan. Our Gentreo Pets will ensure the care of your pets if you can’t be there for them.
Each of these legal documents will protect your wishes, finances, and loved ones when the unexpected happens.
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Gentreo has the resources to help you create a custom, affordable estate plan. We have coaches who can walk you through the process of selecting and creating just the right estate plan for your needs. And if you have legal questions, we have partnered with estate planning attorneys in all 50 states so you can get personal state-specific answers.
Once your documents are created you can securely store them in our Gentreo Digital Family Vault where you can access them at anytime from anywhere.
Sarah and Bill’s Story – Emergency Planning:
Sarah and Bill had been married for ten years and had always been financially responsible, setting up an emergency fund account in case of unexpected situations.
One day, Bill suffered a severe accident and was rushed to the hospital. Sarah was devastated and worried about how they would pay for his medical bills. Then she remembered the emergency fund account they had set up together. She quickly accessed the account and used the funds to pay for Bill’s medical expenses.
As Bill’s condition improved, he was unable to handle his financial affairs. Sarah knew that they needed to take action quickly, so she used the power of attorney that Bill had given her to manage their finances. She used their emergency fund account to continue paying for Bill’s medical bills and to cover their household expenses while he recovered.
Sarah was grateful that they had taken steps to prepare for an emergency situation and knew that without their emergency fund account and Bill’s power of attorney, they would have been in a much more difficult situation.
Throughout Bill’s recovery, Sarah continued to manage their finances and work with the medical professionals to ensure that Bill received the best care possible. Eventually, Bill recovered and was able to resume managing their finances.
The experience brought Sarah and Bill closer together and strengthened their relationship. They were thankful for each other and the importance of being prepared for any unexpected situation that might arise.
